We reach our vision and targets by developing a strong execution-centric performance culture relying on empowered personnel. Motivated and enterprising people are the key to success and the successful execution of our strategy.

Remuneration at Neles

The objective of our remuneration principles is to attract, retain and reward our people. Neles supports, develops and encourages our people as individuals and as team members to perform and to help us achieve our targets and to strive for performance excellence. Total remuneration structures may vary by country and are aligned with Neles’ financial performance as well as with internal and external references. We monitor remuneration levels for similar positions among peer companies.

On June 30, 2020, due to the partial demerger of the Minerals business, Neles Corporation started independently operating when the corporate name was changed from Metso Corporation. The 2019 figures on this page are from the time before the demerger and as they were reported in the Annual Report 2019.

Remuneration Policy

Remuneration Policy for the company, approved in Metso’s Annual General Meeting on June 16, 2020, describes the remuneration principles and framework for the President and CEO and for the members of the Board of Directors of Neles. The policy will also be applied to Deputy CEO.

The Remuneration Policy has been developed in accordance with the remuneration principles, the 2020 Finnish Corporate Governance Code issued by Finnish Securities Market Association, and the requirements set forth by the amended EU Shareholders’ Rights Directive, which has been implemented in Finland mainly through the Limited Liability Companies Act, Securities Markets Act, Decree of the Ministry of Finance.

Board remuneration

The Annual General Meeting decides on the remuneration of the members of the Board for one term of office at a time.

According to the decision of the 2020 Annual General Meeting, the annual fees that will be paid to Neles Board members in 2020 are:

  • Chair - EUR 115,000
  • Vice Chair - EUR 65,000
  • Other members - EUR 50,000

Additional remuneration:

  • Chair of the Audit Committee (AC) - EUR 15,000
  • Chair of the Remuneration and HR Committee (RHRC) - EUR 7,500
  • Committee members (AC) - EUR 7,500
  • Committee members (RHRC) - EUR 3,750

Meeting fees (excluding committee meetings) based on residence:

  • Nordic countries - EUR 800
  • Other European countries - EUR 1,600
  • Outside Europe - EUR 3,200

Compensation for travel expenses and daily allowances is paid in accordance with our travel policy.

As a condition for the annual remuneration, the members of the Board of Directors of Neles Corporation are obliged, directly based on the Annual General Meeting’s decision, to use 40% of the fixed total annual remuneration for the purchase of Neles Corporation shares from the market at a price formed in public trading, and the purchase is to be carried out within two weeks from the publication of the interim review for the period following the registration of the completion of the partial demerger of Metso Corporation.

Remuneration of Metso’s Board in 2019

As s a condition for the remuneration, 40% of the fixed annual remuneration is to be used for the purchase of Metso’s shares. Altogether, 6,693 shares were acquired on April 29, 2019. There are no special terms or conditions associated with owning these shares.

The Board members, none of whom are employees of the company, were paid annual remuneration and meeting fees totalling EUR 620,650 during the financial year that ended December 31, 2019. The Board members are not covered by Metso’s bonus plans, share-based incentive schemes or pension plans.

Metso’s Board of Directors in 2019:

Member

Position

Total annual
fee (EUR) *)

Number of Metso shares
received **)

Total shareholding
as of Dec 31, 2019 
(number of shares)

Mikael Lilius

Chair

140,400

1,543

35,781

Christer Gardell

Vice Chair

81,400

688

7,864

Peter Carlsson

Member

57,500

629

2,939

Ozey K. Horton, Jr.

Member

12,800

-

1,000

Lars Josefsson

Member

68,400

688

4,521

Nina Kopola

Member

43,950

748

4,697

Antti Mäkinen

Member

73,400

748

1,617

Arja Talma

Member

82,600

866

3,926

Kari Stadigh

Member

60,200

783

10,783

*) Total fee paid partly in cash, partly in shares
**) Shares were acquired on April 29, 2019
***) Metso Board member until April 25, 2019
****) Resigned from Metso’s Board as of August 1, 2019
*****) Elected to Metso’s Board on April 25, 2019

Remuneration and employment terms of the President and CEO

The remuneration paid to the President and CEO is determined by the Neles Board. Neles’ President and CEO is entitled to participate in short- and long-term incentive programs. The terms and conditions of these programs are decided by the Board.

Employment terms and conditions of President and CEO Olli Isotalo

Annual Salary Total annual salary EUR 505,000 including fringe benefits.
Short-term incentive (annual performance bonus) The annual bonus can be earned in accordance with terms approved by the Board. The maximum bonus is 80% of the total annual salary.
Long-term incentives According to the Long-term Performance Share Plan, the maximum share allocation for the President and CEO corresponds to 150 percent of the total annual salary. The purpose of the plan is to align the interests of Metso’s management and shareholders in creating shareholder value.
Pension The retirement age for the President and CEO is 64 years and 4 months (based on Finnish legislation), unless otherwise to be agreed by the Company and the President and CEO. The President and CEO is entitled to participate in a supplementary defined contribution pension plan. The supplementary pension contribution is equivalent to 20% of the annual salary.
Termination of assignment The notice period for both parties is 6 months. Severance pay is the full monthly salary multiplied by 12 if the agreement is terminated by the company.

Remuneration for Executive Management Team members

The Board’s Remuneration and HR Committee decides on the compensation and benefits of the other Executive Management Team members based on the President and CEO’s proposal. The total remuneration comprises a total annual salary, customary fringe benefits, pension as well as short- and long-term incentives.

Participation in variable compensation programs is based on the respective terms and conditions of the program. The Remuneration and HR Committee evaluates the achievement of the targets for the Executive Team members, excluding the President and CEO.

Management remuneration at Metso Corporation in 2019

Total remuneration of Metso’s President and CEO amounted to EUR 752,574 during 2019. The remuneration of Metso’s other Executive Team members amounted to a total of EUR 3,755,660. The tables below include the bonuses paid to the Executive Team, including the President and CEO, amounting to atotal of EUR 885,588.

Executive Team benefits also include a supplementary defined contribution pension plan. In 2019, pension insurance premium payments totaled EUR 465,515 (in 2018: EUR 273,372).

EUR Salary Paid performance 
bonus
Fringe benefits Share-based 
payment
Total
President and CEO Pekka Vauramo 719,886 - 32,688 - 752,574
Other Executive Team members 2,201,113 885,588 27,513 641,446 3,755,660
Total 2,920,999 885,588 60,201 641,446 4,508,234

Short-term incentives

The Neles Bonus short-term incentive plan covers approximately 1,600 employees globally, including the Executive Team. The Board approves the Group-level terms and targets for the Neles Bonus annually. In addition, the Board annually sets and approves the President and CEO’s short-term incentive plan.

The Neles Bonus payout, if any, is mainly based on the achievement of predefined financial targets. For 2019, the financial targets used at Metso Corporation were cash flow, orders received, and operative value added for the Metso Group or Business Area in question. In addition to the financial targets, individual, team and business bonus performance targets are used.

Maximum Neles Bonus payout, % of total annual salary:

Maximum Neles Bonus payout in 2020  
President and CEO 80%
Other Executive Team members 60% (at highest, maximum varies based on role)
Other Neles employees 35% (at highest, maximum varies based on role)

In addition to the Neles Bonus, local productivity plans are designed to drive and support the performance of various production units. Targets for local productivity plans are mainly based on productivity, quality and safety KPIs. Local mandatory bonus plans are defined by local legislative requirements and are typically profit-sharing plans. According to Neles’ Performance and Reward Policy, an employee can participate in a one bonus plan at a time.

Long-term incentives

The Board decides on and implements Neles’ long-term incentive plans. The purpose of these plans is to align the interests of Neles’ operative management and shareholders. The plans also aim to ensure long-term commitment of management and to offer them a competitive reward scheme.

Any shares to be potentially rewarded in these incentive plans are acquired through public trading, and therefore have no diluting effect on the share value. Share repurchase- and share issue authorizations are obtained from the Annual General Meeting. Current valid authorizations are presented on our website at www.neles.com/investors/governance/board. There are no options outstanding or available from any of Metso’s prior option programs.

Neles applies a share ownership recommendation policy for the members of the Executive Team and for the President and CEO. In accordance with this policy, at least 50 percent of the share rewards (net shares after deduction of the applicable payroll tax) received by these individuals under the Performance Share Plans shall be retained until the share ownership of the individual Neles participant amounts to his/her annual gross base salary.

If, for reasons relating to the participant, the participant’s employment or service ends before the reward payment, no reward will be paid from the long-term incentive plans.

Performance Share Plan

The Performance Share Plan consists of annually commencing individual performance share plans, each with a three-year performance period, followed by the payment of the potential share reward. The commencement of each new individual plan is subject to a separate Board approval.

Performance Share Plan 2020-2022

The first plan, PSP 2020–2022, commences as of the beginning of 2020 and the potential share reward thereunder will be paid in spring 2023, provided that the performance targets set by the Board of Directors are achieved. The potential reward will be paid in listed shares of Neles.

The potential share reward under PSP 2020–2022 will be paid based on the performance targets of relative total shareholder return of Neles’ share and earnings per share (EPS). The members of the Neles Executive Team are eligible to participate in PSP 2020–2022.

If all the performance targets set for the first plan, PSP 2020–2022, are fully achieved, the aggregate maximum number of shares to be paid based on this plan is approximately 280,000 shares (referring to gross earnings before the withholding of the applicable payroll tax).

Previous performance share plans 

The delivery of the Performance Share Plan 2016–2018 took place in March 2019. A total of 79,040 shares were delivered to 80 key individuals.

Status of the Performance Share Plans as of December 31, 2019

Performance Share Plans PSP 2017-2019 PSP 2018-2020 PSP 2019-2021
Current   number of participants 84 9 9
Maximum   number of   gross shares to be paid *)      
- CEO  - 26,016 46,200
- Other Executive Team 33,000 60,000 74,400
- Other participants 273,492 19,870 13,254
Total   maximum number   of gross shares to be paid *) 306,492 105,886 133,854
Performance criteria Total shareholder return (TSR) of   Metso’s share during 2017–2019 Total shareholder return (TSR)   of Metso’s share during 2018–2020 Total shareholder return (TSR)   of Metso’s share during 2019–2021
Share delivery year 2020 2021 2022

*) Maximum number of gross shares, taxes included, payable if the performance criteria is achieved in full

Restricted Share Plan

The Restricted Share Plan consists of annually commencing individual restricted share plans, each with a three-year retention period, after which the share rewards granted within the plan will be paid to the participants in listed shares of Neles. The commencement of each new individual plan is subject to a separate Board approval.

The purpose of the Restricted Share Plan is to serve as a complementary long-term retention tool for individually selected key employees of Neles in specific situations.

Restricted Share Plan 2020-2022

The first plan, RSP 2020–2022, commences as of the beginning of 2020 and the share rewards potentially granted thereunder will be paid in spring 2023.

The aggregate maximum number of shares to be paid based on RSP 2020–2022 is approximately 46,000 shares (referring to gross earnings before the withholding of the applicable payroll tax).

Status of the previous Restricted Share Plans as of December 31, 2019

Restricted Share Plans RSP 2017-2019 RSP 2018-2020 RSP 2019-2021
Current number of participants 3 1 3
Number of gross shares nominated *)      
- Other executive team  - 15,000 25,000
- Other participants 14,500 - -
Total number of gross shares nominated 14,500 15,000 25,000
Share delivery year 2020 2021 2022

*) Maximum number of gross shares, taxes included

Deferred Share Unit Plan

Deferred Share Unit Plan (DSUP) is a long-term share value-based incentive plan that aligns and rewards the employee’s performance and Neles share value development during a performance period. The reward is payable after three years of the program commencing if the terms of payment are met. The commencement of each new individual plan is subject to a separate Board approval. Neles Executive Team members aren’t eligible to participate in the DSUP plan.

The DSUP rewards its participants for individual and company and/or business unit level performance during a one-year performance period. The reward potentially earned during the one-year performance period is converted to synthetic share units for an approximately two-year share price performance period, after which the reward is paid in cash based on the value of the share of Neles at the time of payment. Notwithstanding this, the company is entitled to decide whether the reward is paid in cash or in shares of Neles.

The Board of Directors will decide on the launch of the first individual plan within this structure separately at a later date.

Status of the ongoing Deferred Share Unit Plan as of December 31, 2019

Deferred Share Unit Plan  DSUP 2018–2020 DSUP 2019-2021
Current number of participants  109 124
Possible payout year 2021 2022

More information about the plans is available in our Corporate Governance Statement 2019.